medium · Volume Price Analysis climactic
A stock has fallen for 10 days. On day 11, it drops another 3 percent but finishes only 0.5 percent down, with the highest volume of the year.
Is this validation or an anomaly?
- Validation, because closing lower confirms the bears held control all session.
- Anomaly, because volume should be low at the bottom of a trend, not spiking.
- Anomaly, because the huge volume (effort) produced a very small price drop (result).
- Validation, because the bearish trend plus record volume simply confirms more sellers than buyers were active.
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